Revised Data Protection Bill Introduced to Turkish Parliament With Aim of Enactment in First Quarter of 2016

The Prime Ministry submitted a revised Draft Data Protection Bill (“Draft Bill”) to the Grand National General Assembly of Turkey, dated 18 January 2016. Earlier draft legislation on this topic had been submitted in 2014, but the recent Draft Bill contains a number of significant changes compared to the earlier document. The Draft Bill expands definitions of “explicitconsent” and “sensitive data”, as well as makes changes to the proposed structure and appointment methods for the Data Protection Authority (“Authority”). The Draft Bill’s provisions relating to data transfers and appointment of data protection officers are generally similar to the European Union’s General Data Protection Regulation.

The 2016 Action Plan of the 64th Government (dated 10 December 2015) specifically states that data protection legislation is aimed to be enacted by March 2016.

– Treatment of “state secret” is regulated for the first time in a different manner, without providing a clear definition of the term, which has also no reference or place in the respective EU legislation,

– The definition of “data protection officer” is clarified by including relevant responsibility to determine processing methods and purposes of personal data.

– Principles are outlined for transmission of personal data abroad. Similar to the previous draft bill, transmission of personal data to foreign countries will be allowed if such country provides a sufficient level of security for personal data. Transmission of personal data will be allowed even if a country does not meet the necessary security levels, provided the data protection officers in such country undertake to provide in writing to provide a sufficient level of security and the Authority grants permission.

– Exclusions from personal data protection have been widened. The Draft Bill excludes processing personal data for the purposes of art, history, literature and science, or within the scope of free speech. These acts would not be subject to the Draft Bill’s provisions.

The Draft Bill includes structural changes to the Authority, proposing that out of seven board members, four would be appointed by the Council of Ministers and three would be directly appointed by the President of the Republic of Turkey.

Please see this link for full text of the Draft Bill (only available in Turkish).

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Amendments to Insurance Arbitration in Turkey

Amendments have been made in Turkey to the principles for determining the necessary experience for insurance arbitrators, as well as introducing new requirements for the insurance arbitration system. The Regulation Amending the Regulation on Insurance Arbitration (“Amendment Regulation”) was published in Official Gazette number 29598 on 19 January 2016, entering into effect on the same date.

Significant changes introduced by the Amendment Regulation include:

– Experience required for insurance arbitrators will be evaluated on a case-by-case basis.

– Whether an applicant holds at least five years’ experience in insurance law or at least ten years’ in insurance will be evaluated by taking into consideration the quality and quantity of the applicant’s work during such periods.

– The experience condition will not be met unless the period is uninterrupted.

– Whether a task qualifies in terms of the experience conditions will depends on the task being directly linked to insurance technique. Working in an insurance-related institution alone is not sufficient.

– A list will be kept of people who are prohibited from acting as insurance arbitrators.

– The Undersecretariat of the Treasury can swap insurance arbitrators between the life-insurance and non-life insurance areas, taking into account the number and type of disputes.

– Principles are determined for an impartiality undertaking which must be given by arbitrators.

– Once an insurance file is classified as life-insurance or non-life insurance (based on its subject), an arbitrator will be selected from the general list in turn. Arbitrators’ areas of expertise are taken into account for the order of the selection.

– If specific or technical information is necessary, arbitrators have discretion to obtain expert opinions, either ex officio or upon request by the parties.

– If the parties to an insurance dispute are represented by an attorney, the attorney fee is equal to 20% of the attorney fee stipulated under the Minimum Attorneyship Fee Tariff for disputed conducted before court of first instance.

– The Insurance Arbitration Committee must make arbitrator decisions available to any interested person.

Please see this link for full text of the Amendment Regulation (only available in Turkish).

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New Principles for Public Procurement of Research and Development Services Made by the Turkish Ministry of Transportation, Maritime Affairs and Communications Enter Into Effect

The Council of Ministers in Turkey has issued principles for procurements made within the scope of Article 3(f) of Public Procurement Law Number 4734 (“Law”) by the Ministry of Transportation, Maritime Affairs and Communications (“Ministry”; “Principles”). The Principles apply to procurement of all research and development services which are fully financed by the administrative authority, in line with the relevant exclusion under the Public Procurement Law, where the procurement will be utilized by public institutions and organizations, universities, as well as private sector or non-governmental organizations. The Principles were published in Official Gazette number 29589 on 10 January 2016 and entered into effect on the same date.

The administration is responsible for ensuring transparency, competition, equal treatment, reliability, confidentiality, public inspection, proper and timely fulfilment of needs, as well as efficient use of resources during public procurement performed in line with the Principles.

– Rules for participating in public procurement. Participants can request certain documents and information during eligibility assessment.

– Application procedures. Open tender procedures and negotiation procedures are the noted methods, in line with the Principles. In some circumstances, goods and services can be directly procured without any announcements and without taking provisional guarantees, through negotiating the administrative and technical terms, as well as the price.

– Conditions for presenting and evaluating bids.

– Regulations for terms and conditions of written agreements concluded between the administration and the contractor as well as amendment and assignment of such agreements.

Please see this link for the full text of the Council of Ministers’ Decision, including the Principles (only available in Turkish).

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Regulations for Credit Rating Agencies Amended in Turkey to Encourage Independence and Neutrality

Regulations have been amended in Turkey to ensure the independence and neutrality of credit rating activities. Regulatory changes also address credibility and reliability checks, exemptions for international credit rating agencies in Turkey, rating methodologies, as well as notice submissions. The Regulation Regarding Changes to the Regulation Regarding Authorization and Activities of Rating Institutions (“Amendment Regulation”) was published in Official Gazette numbered 29599 on 20 January 2016, entering into effect on 31 March 2016.

Significant changes introduced by the Amendment Regulation include:

– Credibility and reliability checks are regulated in detail for credit rating agencies.

– New conditions are introduced to become an authorized credit rating institution. Candidates must be authorized for credit rating by the Capital Markets Board (or relevant foreign banking authority) and meet certain regulatory criteria related to fundamental principles, professional competence and independence.

– The Banking Regulation and Supervision Agency’s (“BRSA”) authority is removed for granting exemptions to the Turkish agencies of international credit rating institutions regarding certain obligations.

– Documents and information required during authorization applications are reorganized.

– Methodologies used by authorized credit rating institutions must be verified and approved internally, or by consultancy firms or academics with necessary experience and qualifications, on at least an annual basis.

– The scope of publicly disclosures for authorized credit rating agencies has been widened to include information about charges and ethical principles.

– Credit rating institutions cannot announce another rating institution’s rating as their own rating, regardless of the relationship between the institutions.

– Authorized credit rating institutions must now also report information about rating levels (and other information BRSA requests) to the risk center in order to be shared with banks.

Please see this link for full text of the Amendment Regulation (only available in Turkish).

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A Series of Amendments Made to Turkey’s Banking Regulatory Framework for a More Compatible Regulatory Structure with Basel Standards

The Turkish Banking Regulation and Supervision Agency (“BRSA”) has made a series of amendments to a range of banking-related Regulations and Communiqués. Changes apply to banks’ internal systems, capital adequacy, liquidity coverage ratio, equity, as well as disclosures related to credit risk reduction techniques and risk management statement. Building on the regulatory overhaul introduced with the changes published in Official Gazette number 29511 on 23 October 2015; the amendments contribute to establishing a more compatible regulatory structure with Basel standards than previously existed in Turkey and were published in Official Gazette number 29599 on 20 January 2016.

The amendments introduce changes to secondary legislation which collectively align Turkish regulation with the standardized approach introduced in 2012 by the Basel Committee’s Regulatory Consistency Assessment Programme, particularly the Third Basel Accord (“Basel III”). Basel III was issued to prevent insufficiency of liquidity caused by risky loans. Member states, including Turkey, are expected to harmonize domestic law with Basel III provisions by 31 March 2019.

Significant changes introduced by the amendments include (source documents only available in Turkish):

– The Amendment Regulation on Measurement of the Liquidity Coverage Ratio empowers the BRSA to specify the liquidity coverage ratio for development and investment banks, subject to approval by the Central Bank of the Turkish Republic (“Central Bank”). When the BRSA and Central Bank determine liquidity squeeze throughout the financial market, the BRSA can decide (if approved by Central Bank) to keep the liquidity coverage ratio less than the ratio set forth in the article, provided premium liquidity assets are used.

The Board of the Electricity Market Regulation Authority (“Authority“) has issued new Procedures and Principles for the Tariffs of License Holder Entities and Authorized Supply Companies in Turkey (“Procedures and Principles”). Changes apply to subscriber groups and tariffs, although these continue to be categorized in a similar way as under previous regulation. The Board’s decision, numbered 5999-3 and dated 30 December 2015, was published in Official Gazette number 29570 on 31 December 2015.

Significant changes include:

– “Retail companies” are changed to become “authorized supply companies“

– Restrictions on Residential Subscriber Group: Consumers classified in the residential subscriber group become restricted to only one residence, which must be in their continuous use.

– Short-Term Power Requests: An electric meter will be provided for one month to real and legal persons who require electricity for a short-term business, provided the calculated amount is paid in one installment. The period can be extended up to two months.

– Exclusions from Distribution System Utilization Costs: Costs for meter-reading, losses and leakage are excluded from distribution system utilization costs.

– Reactive Energy Tariff: Reactive energy costs will not charged to subscribers who do not have a reactive energy meter installation.

– Retail Sale Tariffs: To efficiently use transmission and distribution networks, multiple time tariffs will be applied to consumers with sufficient infrastructure, subject to the Board’s approval. These will vary between subscriber groups, consumption levels and connection types.

With the new Procedures and Principles, the Procedures and Principles for Tariffs of License Holder Entities and Retail Companies Regulation number 4193 dated 28 December 2012 is repealed. The full text of the Authority’s Board decision was published in Official Gazette number 29570 on 31 December 2015 and are available on this link (only available in Turkish.)

A new regulation in Turkey introduces production of base oil from waste mineral oils as an activity which requires a license and outlines principles for these activities. The Regulation Amending the Petroleum Market License Regulation (“Amendment Regulation”) was published in Official Gazette number 29602 on 23 January 2016, entering into effect on 1 February 2016.

Significant changes introduced by the Amendment Regulation include:

– Mineral oil license holders or distributor license holders can produce base oil from waste mineral oil, provided the production is registered in their licenses as a sub-registration.

– Applications to amend certain aspects of mineral oil licenses or distributor licenses, which have a sub-registration for base mineral oil, will be examined by the Petroleum Market Head of Department. These include applications to:

– Change license information in relation to production of mineral oil and base oil usage.

– Insert or remove a sub-registration for base oil production in their licenses.

– Insert or remove a registration for production of mineral oils.

– If a license holder cannot carry out dealership activity for more than six months, the Petroleum Market Head of Department will cancel transportation, dealership and eligible consumer licenses, as well as other licenses, via a resolution by the Energy Market Regulatory Board.

– Existing mineral oil license holders or distributor license holders, which have a mineral oil sub-registration in their license, can produce base oil from waste mineral oil until 1 January 2018, without inserting a sub-registration for base oil production into their licenses.

Please see this link for full text of the Amendment Regulation (only available in Turkish).

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Performance Evaluation System Established for Assessing Competence of Tax Inspectors in Turkey

A performance evaluation system has been established in Turkey for objectively evaluating the professional competency of tax inspectors and assistant tax inspectors. The Ministry of Finance published the Regulation on Tax Inspection Board Performance Evaluation System (“Regulation”) on 11 January 2016. The Regulation outlines assessment methods and principles for the performance evaluation system, effective from 1 January 2016.

Performance is assessed annually, based on the calendar year. The performance evaluation system takes into account:

– Tax inspectors and assistant tax inspectors’ success on the exams during their duty.

– General assessment by the Head of Tax Inspection Board and Head of Group.

– Educational development of tax inspectors and assistant tax inspectors.

Performance evaluation results can be re-assessed ex officio, or based on an objection. The Ministry of Finance will re-assess if an evaluation is deemed to have been made maliciously or contrary to the facts.

Please see this link for the full text of Regulation. (Only available in Turkish)

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Turkish High Planning Council Announces 2016 Program

The Turkish High Planning Council has announced its 2016 Program (“Program”). The Program addresses economic developments worldwide, as well as reviews the progress and objectives of the Turkish economy. Particular emphasis is placed on increasing the accuracy of judicial decisions and reducing the duration of judicial proceedings. The Program is annexed to the Council of Ministers’ Decree on the Implementation, Coordination and Supervision of the 2016 Program, published in Official Gazette number 29602 on 23 January 2016.

The Program addresses Turkey’s current situation in areas such as education, healthcare, justice system, security, fundamental rights and freedoms, culture and art, employment and sport. Accordingly, it outlines purposes, objectives, policies and measures for these areas in 2016.

The present condition of Turkey’s justice services is reviewed in detail, including policies and measures. Accordingly, establishment of the Istanbul Arbitration Center is explained and it is noted that Regional Courts of Justice and Regional Administrative Courts will start to serve in 20 July 2016 (more information).

The primary objectives are noted as increasing the percentage of the judicial proceedings which are concluded within a reasonable time, along with increasing the accuracy of judgments by improving specialization in judicial services, particularly regarding finance and informatics.

Important policies and measures determined for justice services in the Program include:

– Developing and implementing legal clinics.

– Determining and applying optimal terms for proceedings and investigations, based on different dispute types.

Turkey’s Central Bank has amended the amount which banks must pay for each cheque leaf where cheques fully or partially bounce. The Communiqué to Amend the Communiqué on Printing of Chequebooks, Amounts that Banks Must Pay to Check Bearers and Notification and Announcement of Prohibition Decisions as to Issuance of Checks and Opening of Check Accounts (Number: 2010/2) (“Amendment Communiqué”) was published in Official Gazette number 29602 on 23 January 2016, entering into effect on 25 January 2016.

According to the Amendment Communiqué, the drawee bank must pay the following amounts to cheque bearers (who are not the issuer of the cheque), for each cheque leaf submitted in due time:

– If a cheque bounces:

– If the check amount is less than TRY 1,290, the drawee bank must pay the face check amount.

– If the cheque amount is TRY 1,290 or higher, the drawee bank must pay TRY 1,290.

– If a cheque bounces for a partial amount:

– If the cheque amount less than TRY 1,290, the drawee bank must pay an amount which completes the partial bounce up to TRY 1,290 (provided the cheque amount is not exceeded).

– If the cheque amount is TRY 1,290 or higher, the drawee bank must pay TRY 1,290 in addition to the partial provision of the check (provided the cheque amount is not exceeded).

These thresholds were previously TRY 1,200.

For cheques issued in accordance with earlier communiqués, drawee banks must pay:

– Up to TRY 740 for each cheque leaf, if a cheque bounces.

– An amount that completes the partial provision to TRY 740 per cheque leaf, if a cheque partially bounces.

These thresholds were previously TRY 700.

Please see this link for the full text of the Amendment Communiqué (only available in Turkish).

The Turkish Constitutional Court recently ruled on the constitutionality of Article 7(1)(b) of Decree Law Number 556 on Protection of Trademark Rights, which allows the Turkish Patent Institute (“TPI”) to conduct ex-officio similarity examinations. The Constitutional Court’s decision means that trademark owners in Turkey continue to be prohibited from signing co-existence agreements and consent letters. Trademarks which are identical or confusingly similar, in relation to the same type of products and services, must be registered to the same proprietor.

Under Article 7(1)(b), if an application is identical or confusingly similar to a trademark with an earlier registration or application date, in respect to the same types of product or services, this constitutes absolute grounds for the TPI to refuse a trademark application. The TPI does not need to receive a third party objection in order to conduct an ex-officio similarity examination.

Ex-officio similarity examination by the TPI have caused trademark owners to develop agreements between themselves which are actually impossible under Turkish trademark law. For example, agreements which enable trademarks to remain together, or claims by trademark owner about consenting to each other’s trademarks being registered.

The Ankara 3rd Court of Intellectual and Industrial Property Rights requested cancellation of Article 7(1)(b). It claimed that all people have freedom of labor and contract. It argued that in some cases, within the context of ex-officio similarity examinations, the TPI is considering refusal grounds that can only be raised by third parties through oppositions (as a relative ground for refusal). The Ankara court went on to argue that fundamental rights and freedoms can only be restricted by laws passed through the Grand National Assembly, not by Decree Laws published by the Council of Ministers.

The Constitutional Court refused the Ankara court’s cancellation request. It held that Article 7(1)(b) meets the requirements that a trademark be unique, not imitated and possess the character of a guarantee. The court held that Article 7(1)(b) protects property rights for earlier registered trademark owners, as well as the rights of third persons who intend to undertake transactions based on the trademarks. The Constitutional Court noted the article was amended by Article 13 of Law Number 5194 (dated 22 June 2004) and had therefore been regulated via a legislative action.

Please see this link for the full text of the Constitutional Court’s decision (only available in Turkish).